Tuesday, August 14, 2007

The Glass Is More Than Half Full

For five years in a row, polls have showed that 65% to 85% of Americans have thought we were in a recession or were about to enter a recession. For five years in a row, the American economy has grown at an unprecedented pace. Unemployment is low, wages are up, and wages for the lowest earners are up the most. Strangely, the percentage of Americans that presently think their personal financial situation is good, very good, or excellent is almost exactly the same as the percentage that think the economy is in the tank or is about to tank.

Why this disparity? Why are Americans so incredibly gloomy about the economy when it is very robust and their personal economies are doing well? Brian Wesbury of First Trust Portfolios thinks he has at least part of the answer in this WSJ article.

In order to get bigger audiences, which translate to advertising income, broadcast economic discussions usually present both a bull and a bear view of the economy. Not only is this done in the name of fairness and balance, but as Wesbury points out, it creates a more lively broadcast that brings in a bigger audience. He opines that “having two economists debate about whether GDP will grow 2.1% this year or 2.4% is downright boring.”

The problem with the pro-con debate scenario, claims Wesbury, is that it “leaves an impression that the experts are split 50/50, when in reality it's more like 80/20, or 90/10.” He says that “if all the public sees is an endless stream of 50/50 debates, then it is really not that much of a surprise that people think the future is basically a coin toss. And a coin toss, especially in a time of war and terrorism, is not very good odds.”

This is a very interesting argument, and Wesbury certainly makes a valid point. He says that “people gather knowledge about the rest of the economy, the part they cannot see, from watching news.” So if the economic news comes across as gloomy, people tend to adopt that view themselves. But I am left to wonder how many Americans actually tune into the kind of programs Wesbury is talking about.

I get some economic news from radio programs. I rarely get news of any type from TV programming. I get most of my news through print media and online print media. Do the same economic debating tactics Wesbury describes appear in print media as well? Not so much in the stuff I read.

Perhaps Wesbury believes that the percentage of the population that does get their economic news from broadcast media become the opinion leaders which poison the opinions of the masses. There could be validity to this assertion, but I’d like to see some empirical data on it.

I’ve got to believe that there is more going on here than unbalanced broadcast economic reporting. If you go to Gallup Poll’s list of topics and start checking out recent polling results, you will find that Americans are pessimistic about a lot of things. In fact, just about any topic that is viewed through a nationwide lens has Americans seeing it pessimistically. The general mood of the country polled in July with 74% dissatisfied and only 27% satisfied.

It seems to me that what these polls show is that we are cranky and unhappy about anything that has to do with our nation as a whole. We are more prosperous than any nation that has ever existed in the history of the earth, but this brings us no joy. We are dour, ungrateful, and dissatisfied when it comes to our nation.

Certainly part of this could be the steady diet of bad news that we get 24x7x365 from more information sources than have ever existed. News purveyors know that we don’t pay much attention to good news, but that we love tabloid-style reporting.

It seems that we have come to lack faith in ourselves as a nation. Why is that? Does it have anything to do with the fact that we can’t seem to militarily and diplomatically manage and control a regional conflict? (Heaven forbid that we should have to face a major global conflict.) Perhaps. Or perhaps this is merely a symptom of our lack of national faith. We also seem to lack faith that our nation can effectively absorb immigrants that want to come here.

Richard Lyman Bushman described the two-pronged American dream in this Pew forum. He said that the individual American dream is “the promise that in America, everyone has a chance to prosper and to achieve respectability.” “But,” he says, “there also is a corporate dream, whether we like it or not, and that is of a righteous America, a people who are blessed of God” (corporate meaning the American people as a whole). “This corporate American dream includes a virtuous political leadership with the unselfish purpose of seeking, without regard for personal good, the public good – not just to manage the varying interests of society but to bless people.”

Bushman says that this corporate dream is not simply a relict of a bygone era; it exists today. He says, “Americans do hunger for an idealistic statement on the nation's purpose and destiny.” The panel of journalists interviewing Bushman agree with him. And I think he’s right. Most Americans hold a belief in their psyches that America should be a benevolent and good force in the world, or even the preeminent human-based source of good in the world.

We are prosperous, but I believe that the perception is widespread that we’re not living up to this ideal of the benevolent America. The individual part of the American dream is working, but the corporate part is dying (at least in the minds of the people). And yes, I believe that part of the cause is the constant barrage of news that makes us believe that America is bad, or at least isn’t as good as she should be. Like a bunch of gossip column readers, we’re ever prepared to snatch up the latest unsavory news and to believe the worst.

I’ve got several suggestions for revitalizing the corporate American dream. The first is to look around and count your blessings. Count your individual blessings. But also count the endless blessings that devolve upon our nation. Think about the blessings that are yours because you are an American. Think about the blessings your neighbors have because they are Americans.

My second suggestion is to squelch the bad news. I’m not saying that we ignore problems that we should work to resolve. I’m saying that we should place these issues in proper perspective. Exercise your freedom to switch off the radio, the tube, the print, or the Internet channels that equate to flowing troughs of anti-American sludge. What do you expect a steady diet of that stuff to yield? To paraphrase, “For as [a nation] thinketh in [her] heart, so is [she]” (Proverbs 23:7).

I believe it is imperative (see June post) that all Americans need to learn better what it means to be an American. Since our nation is founded on ideals rather than on atavisms, we must teach and learn those ideals much better than we do at present. Not only do we need to learn civics, we need to do our civic duties.

Finally, I would suggest that we follow Ronald Reagan’s old campaign slogan, and get to work making America great again. Start with doing what you can do yourself and then reach out to others. Moral equivalence practitioners will disagree with me, but I believe that America is more than simply a great country. I believe that the United States of America is the greatest nation on the face of the earth today. She isn’t perfect and she never will be. But she is great. Stand up and be proud to be an American. Let’s get to work making America an even greater nation than she is today.


Alienated Wannabe said...

Another great post, Scott. I love Richard Bushman. He is one of my favorite historians/authors. Have you read his book "Joseph Smith and the Beginnings of Mormonism?" It's great. I have not had a chance to read his new one "Rough Stone Rolling," but I hope to get it soon.

Democracy Lover said...

It seems to me that the American people are right to be pessimistic and it's hardly the mainstream media that are causing it. In fact, when I read or view mainstream media, I get no inkling of the problems facing our nation.

Bushman is right that Americans believe that we should all have a chance to prosper. Unfortunately it is quite evident that a small minority are prospering and a larger and larger number of Americans are struggling or living one accident or illness away from bankruptcy.

I think he's right also that we want to believe we have "virtuous political leadership with the unselfish purpose of seeking the public good". It is patently obvious that our politicians are neither virtuous, leaders, unselfish, nor concerned with the public good.

These are not PR issues that can be solved by "counting our blessings" or ignoring bad news. It will require us to get off our collective duffs and change our government. We are in this mess largely because we have ignored our political duty as citizens or allowed ourselves to be misinformed and misled by an irresponsible media.

We have a chance next year to throw the bums out, and elect men and women of courage and compassion who are dedicated to the ideals of this nation and to making this nation live up to those ideals. I wish I believed we would do that.

Reach Upward said...

AW, I have only read Rough Stone Rolling among Bushman's books, although, I have read a number of other shorter articles of his. I find his approach to be both forthright and pleasant most of the time.

DL, you are surely right that we need to get off our duffs and do our civic duties to make America better. But I disagree that we have good reason for the pessimism that pervades our society. Your suggestion that only few prosper is ridiculous. The "poor" in our nation enjoy more square footage and higher quality of living space than the "rich" in most nations of the globe.

GMU professor Todd Zywicki shows in this WSJ article (requires subscription) that the real cause of increase in the bankruptcy rate since 1970 has been the whopping 140% increase in household tax burden. At the same time, household income increased by 75% and other household expenses (including medical) increased by about 72%.

In other words, the reason more "Americans are struggling or living one accident or illness away from bankruptcy" has been the real increase in household tax burden. This does not specifically reference federal tax rates, but rather, the real household tax burden from all sources of taxation. If we want to give more Americans the margin to properly manage their household finances, we need to reduce the household tax burden.

neonprimetime said...
This comment has been removed by the author.
Democracy Lover said...

It's really great that the poor in Los Angeles are able to live like a lower middle class Haitian - ahhh, the American dream...

Todd Zywicki is an idiot and an apologist for the credit industry. He is dead wrong.

Democracy Lover said...

The problem with Zywicki's "analysis" (I had to rush off before so just attacked him randomly) is that for the average working person, federal taxes and in most cases state taxes have dropped over the last 30 years. The increase is almost solely due to the property tax. That tax has risen due to 2 key factors: 1) Reductions in federal and state taxes without reductions in mandated programs leaves local governments no choice but to increase taxes and the property tax is usually their only alternative; and 2) the irrational exuberance of the housing market that has driven up prices and assessed valuations.

In both cases, the chief culprit is federal government policy - particularly Republican conservative policy that mandates reductions in taxes while increasing expenditures and fails to provide meaningful regulation to the financial industry.

That said, taxes are rarely going to cause a working family to be put out on the street. They can manage, albeit with difficulty, to absorb the slow increment in taxation even with the stagnation in wages (also caused by conservative anti-labor policies). What they cannot absorb is the catastrophic cost of an uninsured major illness or injury. That can easily saddle them with bills far in excess of their annual income at a time when their earning ability is depressed by their ill health.

There is a fallacy among conservatives that the government is still providing lots of free services and support to poor people in this country. I would urge you to drive a mile or so outside your nice middle class enclave and find the local run-down trailer park where the people who wait on you in the stores for minimum wage are living. Ask them about the generous handouts they get from the government.

Reach Upward said...

I happen to have inside information on how folks in the local trailer park fare. A number of them are working poor. Many of those are in this situation temporarily and are on the way to raising their prospects. But a large cohort of folks in the park that receive some or a lot of government assistance.

Your arguments that overall tax burden has increased because of tax cuts at the federal level is beyond ridiculous. We're talking overall actual tax burden rather than the rates being charged. If there is a shift from centralized to localized taxation, there is no reason that it would result in a 140% tax burden increase.

Reach Upward said...

No doubt catastrophic medical expenses frequently comprise the straw that breaks the camel's back, resulting in the filing of bankruptcy. However, far fewer households would find themselves in this predicament if taxes did not gobble up so much of the household income.

Hence there is a good argument in favor of insurance coverage for catastrophic medical expenses. Lenders would do themselves a favor by requiring that prospective debtors have such insurance, which tends to be rather low cost, since risk is relatively low.

Democracy Lover said...

I also see no reason why a shift from federal/state to local taxes would cause a 140% increase. Zywicki's "research" is showing a 140% increase in taxes caused by a 75% increase in gross income, that's hardly the cause of anyone's bankruptcy.

Take a look at some other numbers, I think you might find them instructive.